How reducing my hours will effect my final salary pension.?

15 Apr 2019, 18:35

I have 20years paid into the the final salary pension scheme and 10 CSDB blocks (from 2008) I am 58 and wanting to reduce my hours from 5days to 4 days but nervous to do this because I wonder how this will effect the final salary part of my pension. I plan to reduce my hours to 3days when I am 60 and can take my pension. It’s all very confusing can anyone clarify?

How reducing my hours will effect my final salary pension.?

15 Apr 2019, 19:04

It is quite confusing especially since the changes made in 2014(details here). My understanding is that your final salary pension is still based on your pay, so any decision to reduce your hours before taking your it will affect how much you get.The thing to do is take your pension as a full timer if possible, but preferably not before NRA.

I would advise contacting the pensions dept. for clarification.

How reducing my hours will effect my final salary pension.?

18 Apr 2019, 07:37

Thanks Robert

How reducing my hours will effect my final salary pension.?

18 Apr 2019, 09:51

When they shut down the RMPP on the 31st of March 2018 to further accrual they did that the final salary part of Section C would no longer be linked to salary . But stay at the current pay rate and go up by RPI instead. So it is possible that no matter what changes to your hours the figure they use would stay the same. Also they used to use the best year of the last three years when you reach NRA. Still worth double checking regardless

How reducing my hours will effect my final salary pension.?

18 Apr 2019, 13:45

This is the definition of pensionable pay in the plan guide:

Pensionable pay

This is used to calculate the part of Section C members’ pension benefits that relate to service before 1 April 2008. It is your basic pay at 1 April 2014 and subsequent increases that the Company deems to be pensionable, plus any pensionable allowance, minus the Indexed Lower Earnings Deduction applying (which for a full-time employee is £3,328 increased each April with effect from 1 April 2014 by the increase in the Retail Prices Index for the 12 months up to the preceding September).

If you work part-time, the pensionable pay in respect of a calculation year – i.e. any year within the last three, providing it ends on the last day of reckonable service or a date which is 91 days or up to eight multiples of 91 days) before the last day of reckonable service – used for pension purposes but not for lump sum death in service purposes will first be adjusted to its full-time equivalent.

When calculating pension benefits and lump sum death in service benefits, we use your highest pensionable pay for any calculation year – i.e. any year within the last three, providing it ends on the last day of reckonable service or a date which is 91 days or up to eight multiples of 91 days) before the last day of reckonable service – or, if greater the highest average of your pensionable pay in any three consecutive tax years in the last 10 years before you leave service, take your benefits or die.

Where a calculation year or tax year other than that which ends on your last day of reckonable service is used, pensionable pay will be increased to take account of the intervening period. If you work part time, the pensionable pay used to calculate your benefits for pension purposes but not for lump sum death in service purposes will first be adjusted to its full time equivalent. When calculating the lump sum death in service benefit, pensionable pay is not reduced by the Lower Earnings Deduction.

I would repeat mine and FAB's suggestion of contacting the pensions people for proper guidance, and please post their answer on here as I'm sure others will be interested.